How much of the failures to achieve Pareto efficient outcome observed in a simple 2 x 2 dominance solvable game can be attributed to strategic uncertainty and how much is actually due to individual bounded rationality? We address this question by conducting a set of experiments involving two...

We investigate the impact of various audit schemes on the future provision of public goods, when contributing less than the average of the group is sanctioned exogenously and the probability of an audit is unknown. We study how individuals update their beliefs about the probability of being...

How is one's cognitive ability related to the way one responds to strategic uncertainty? We address this question by conducting a set of experiments in simple 2 x 2 dominance solvable coordination games. Our experiments involve two main treatments: one in which two human subjects interact, and...

It is commonly assumed that friendship should generally benefit agents' ability to tacitly coordinate with others. However, this has never been tested on two "opposite poles" of coordination, namely, games of strategic complements and substitutes. We present an experimental study in which...

We consider a society with informed individuals (adults) and naive individuals (children). Adults are altruistic towards their own children and possess information that allows to better predict the behavior of other adults. Children benefit from adopting behaviors that conform to the social norm...

The epistemic conditions of rationality and mth‐order strong belief of rationality (RmSBR; Battigalli and Siniscalchi, 2002) formalize the idea that players engage in contextualized forward‐induction reasoning. This paper characterizes the behavior consistent with RmSBR across all type...